College Essays-Working with Ratios

Who generates the ratios and is one ratio, such as earnings per share, helpful by itself? Discuss the specific examples of the following ratios below. Explain how ratios are used within the corporation and how they are used to compare corporate results with outside corporations. APA Format. Sources must be scholarly/academic only.

There are three categories of ratios:

Liquidity – how much cash can be raised quickly.

Profitability – how effectively resources are being used.

Solvency – the ability to meet financial obligations as they come due.

Liquidity Analysis Examples:

Working Capital

Current Ratio

Solvency Analysis Examples:

Debt to Equity Ratio

Debt Service Coverage Ratio

Profitability Analysis Examples:

Gross Profit Ratio